The Internal Revenue Service has placed two employees on administrative leave in connection with a 2010 conference in Anaheim, California, which cost millions of taxpayer dollars.
The employees were not identified in a Wednesday statement from IRS Acting Commissioner Danny Werfel, nor were the exact circumstances of their alleged wrongdoing detailed.
The incident involved a party inside a private suite at a hotel in Anaheim, the statement said. Food was allegedly provided free of charge, a violation of standards.
Pending further review, the IRS has started the process of removing the employees.
"When I came to IRS, part of my job was to hold people accountable," Werfel said in the statement. "There was clearly inappropriate behavior involved in this situation, and immediate action is needed."
The move came just one day after an audit of the agency showed the IRS spent millions of taxpayer dollars on everything from event planners' commissions to speakers' fees to guest prizes to parody videos at the 2010 conference.
The beleaguered agency -- already snared in controversy over its targeting of conservative groups seeking tax-exempt status -- spent $4.1 million on the conference, with "questionable expenses" comprising much of the budget, according to the report released Tuesday by the Treasury Department's inspector general for tax administration.
The audit notes that a large chunk of that money -- about $3.2 million -- came from unused funds allocated for hiring.
This was in the same year that the IRS began to single out conservative and tea party groups that sought tax-exempt status, in part because the agency said it did not have the personnel to handle the overwhelming amount of applications pouring in that year.
The August 2010 conference, held by the Small Business/Self-Employed division, had 2,600 attendees at three hotels in Anaheim.
Reference: CNN's Dana Bash and Ashley Killough contributed to this report.